Exam 11: Conduct Invalidating Assent

A basic element of fraud is a false representation or a misrepresentation.

Fred is a concert violinist who is scheduled to perform at Carnegie Hall for the first time.He buys what he is told is a Stradivarius violin from a well-known, reputable dealer in quality violins, and he pays the going rate for a Stradivarius.He later learns the violin is an imitation, although it is a good imitation, which fooled even the dealer.In this case:

A contract induced by threatening to bring a civil suit against an individual is prohibited:

For a misrepresentation to be material, it must be likely to induce a reasonable person to manifest assent or the maker must know that it would be likely to induce the recipient to do so.

a.What are the two types of duress and what is the effect of each on the contract involved? b.Give an example of each type of duress. c.Who does the law intend to protect by reason of the defense of duress? Why does the law protect this type of person?

Identify two situations in which silence or nondisclosure constitutes a misrepresentation.

Physical compulsion and improper threats are the two basic types of duress.

James threatens to hit Kenneth in the head with a baseball bat unless Kenneth signs a contract agreeing to pay James $400 for his saw.Because of the threat, Kenneth signs the contract.

Sam wants to sell his golden retriever to Al.Sam tells Al that the dog is three years old and that he will point, back, and retrieve.Al relies on these statements and purchases the bird dog.Although the dog is three years old and will point at birds, he will not back (honor another dog's point).The buyer has most probably been a victim of:

a.Name two types of nonfradulent misrepresentation and define each one. b.What remedies may be available for nonfraudulent misrepresentation?

An arm's length transaction is one in which the parties owe each other no special duties and each is acting in his or her self-interest.

The law would most likely impose a duty of disclosure in a transaction between:

In the Berardi v.Meadowbrook Mall Company case, the court found:

The law will carefully scrutinize contracts between Pete, a trustee, and Mason, a beneficiary of the trust, to make sure there was no undue influence by Pete.

Which of the following can meet the scienter requirement to establish fraud in the inducement?

Define and discuss the concept of materiality in relation to misrepresentation

Fraud in the inducement will render an agreement void.

To obtain relief for negligent or innocent misrepresentation, the elements of fraud must be present but the misrepresentation need not be material.

Define undue influence and name some of the relationships that would be affected.

Undue influence is the taking of unfair advantage of a person by reason of a dominant position based upon a confidential relationship.